Issue link: http://palletcentral.uberflip.com/i/1040159
Industrial Production Finally Seeing Signs of Tight Labor Market Unfortunately, the stronger growth is creating some problems for small business and certain segments of the economy. The economic recovery is now in its 9th year. Growth of 2% had been sufficient to push unemployment below 4% by late 2017. The even stronger growth this year is making it more difficult for firms to find or retain qualified employees. The Small Business Association Survey of economic conditions rates flagged labor issues as one of their biggest problems. The quarterly index for Unfilled Job Openings hit a new record high of 38% in July. The previous peak for this index was back in 1999 at only 34%. (For perspective, the index hit only 30% in 2006.) Two segments of the economy are having a particularly difficult time. Construction firms are really struggling to find enough employees to build additional housing. Lack of labor is one factor constraining the recovery in housing starts. The other segment is the transportation industry. Transportation firms report a shortage of qualified truck drivers. To attract and retain workers, the wages in this segment are rising much faster than the national average. Wages for the general economy were moving up 2.7% in the second quarter of 2018 (wages rose 1.7% in 2017). Trucking firms report the wage boost is approaching 4% or more. This will translate into higher shipping costs in 2019. Lumber Prices Did Return to Earth As mentioned in my previous article entitled "Supply Disruptions Drive Lumber Prices," the surge in lumber prices could not be sustained. Lumber prices for western lumber prices (Douglas Fir and Spruce) nearly doubled from late 2016 to the peak in the second quarter of this year. Lumber prices finally fell sharply over the last few months. The key line price for western U.S. lumber (Douglas Fir Green) is down over 30% from the peak levels. The surge in prices did not reflect demand. Housing starts Filling Job Openings palletcentral.com PalletCentral • September-October 2018 25 iStockphoto.com/Darinburt iStockphoto.com/wit88